GM, Chrysler get Canadian aid, but told to cut more

The governments of Canada and the province of Ontario said they would provide Chrysler with C$1 billion, advancing C$250 million right away. It will distribute another C$500 million in early April and the remainder as of May 1.

"Very clearly, if the money had not been forwarded today, (Chrysler) would not have been able to meet payroll today or tomorrow," Tony Clement, Canada's industry minister, told reporters in Ottawa.

"So we were faced with this choice of a disorderly bankruptcy ... we felt now was the time to announce this."

GM is eligible for up to C$3 billion in bridge loans and the government said it hoped to close that deal "very soon".

Ottawa and Ontario first announced the short-term financing in December but neither company has drawn on it.

Canada will provide no further financing unless acceptable plans are produced. If they aren't, the government would have the option of calling the loans.

"The plans submitted by General Motors and Chrysler to the government of Canada do not go far enough to ensure the long-term viability of these companies," Clement said.

In addition to proving their viability, the companies will have to commit to maintaining 20 percent of their North American production in Canada.

On Monday, Washington demanded tough new restructuring plans at GM and Chrysler and forced out GM's chief executive.